Grain markets are called mixed to better this a.m. following
a mixed to firmer overnight session. A
little bounce after yesterdays weak price action; some of the strength came
from crop progress update that came out yesterday afternoon.
When the grain markets did end the overnight session we had
corn up 4, KC wheat up 3, MPLS wheat up 1, old crop beans up 6, and new crop
beans up 3. At 8:00 outside markets have
crude off a buck, the DOW mini futures pointing towards around an unchanged open,
gold about unchanged a slightly weaker US dollar with the cash index at 79.820.
Yesterdays weakness seemed to come from a couple different
things with wheat leading the pressure.
First off was some radar action in parts of HRW growing areas. Now was it enough to help the crop? To me it still looks like the western part of the
HRW growing area is plenty dry and the forecast maps I am looking at don’t show
much relief.
Another thing that lead to some weakness for wheat yesterday
was the fact that we just haven’t seen any actual increase in US Wheat business
because of the issues in the black sea.
That isn’t to say that at some point we won’t but so far we haven’t.
I also thought wheat had a weak close with reversal type
action last week; so I thought maybe we seen some additional technical selling
pressure yesterday. All three of the
grains now have charts that could be leading to some selling; and we still have
the funds long corn and beans. Here is
CHS Hedging Recap of CFTC.
One thing that I think we need to consider is the position
the funds have in corn now versus a year ago as well as how short they got at
one time last harvest. It’s about
400,000 contracts difference right now; and if we don’t see headlines that are
positive or a balance sheet that is positive we have to realize that we have
risk that the funds decide to pitch length and maybe even go back to the short
side. If we have a 14 billion bushel
crop or so do you think the funds will want to be long corn???? I realize that is a big IF, but my point is
it could really be scary for prices should the cards end up laying on the table
wrong. As mentioned numerous times
should all those cars end up being aces the upside potential remains very
strong as well. Bottom line that I am trying
to communicate is the fact that we have plenty of risk and potential reward; so
the recommendation is to use good risk management and find a comfort level in
your marketing plan which should be unique to you and your operation.
Railroads continue to struggle; but it does feel like they
have picked up a little with the warmer weather. But to offset that I have seen some birdseed
buyers actually cancel some car orders they have had on. It seems that business has slowed down. To me it feels like things could continue to
be very volatile. We likely continue to
see the car back log hit when we really don’t want it to hit as producers get
very busy and some demand slows down on the other end.
Overall many have thought that basis would improve as car
costs go down and it should; but what if we missed the demand? What if there is simply too much supply to move
at the wrong time? I guess we need to
realize that we have so many unknowns that I wouldn’t want to guarantee much in
this market place.
Here is a link to CHS Hedging crop progress. https://www.chshedging.com/UserFiles/Documents/2014/Research/USDA%20Crop%20Progress/Crop%20Progress042114.pdf
Some where a little surprised on the lack of corn planting
progress. We are still about ½ of the
last 5 year average; many where looking for a little bigger number then we got. Overall most look at the weather forecasts
and think that plenty of progress will be done; but maybe it is a little more
debatable then that?
As mentioned above birdseed business feels like it has
slowed down a little bit. I think some
buyers still need coverage but the bids have slipped a little the past couple
days. I did think that crush sunflowers
only down 10 cents a cwt yesterday was a moral victory; but the overall market
pressure didn’t lead to many calling to buy birdseed products.
Here is more market info from CHS Hedging Morning Highlights
Morning Highlights
By Jack Willbrand
- Grain
markets responded positively overnight after the weekly Crop progress
report showed that we are possibly farther behind than what most traders
originally thought. Corn planting completion is at 6%, which is 8%
behind the 5 year average of 14%. Despite the lack of movement so far this
spring, there is optimism to catch up this week after rainfall was limited
to under 1/10 of an inch in major corn growing areas during the last 18
hours.
- As of 6:32
AM CT: The Dow Jones Index is up 16 points to 16,387, the S&P 500 is
still at 1,865 and NASDAQ is up 7 points at 3,559. The US dollar slightly
weaker.
- Reports
Today: Existing Home Sales will be released at 9:00 AM CT, Cold Storage
will be out at 2:00 PM CT and API Energy Stocks will be released at 3:30
this afternoon.
- Today is
first notice on May ICE Coffee futures and last trading day on May NY
Crude Lt.
Corn
- Yesterday’s
rains have moved east without causing too much concern for further field
work delays. The precipitation will benefit newly planted seeds.
- The latest
extended forecast shows windows for planting headway in the 1-5 day, then
a wetter overall southeastern Midwest in the 6-10 day.
- South
Korea purchased 60,000 MT of US or South American corn.
- Barge
availably out of Savage/St. Paul will increase this week as empty boats
push north. (Bid 485% for the Balance of April)
- CK/CN is
weaker overnight, trading at a 5 ¾ carry.
- First
notice day on May futures is April 30th.
Oilseeds
- The trade
remains focused on short domestic stocks and Asian demand.
- Yesterday
there were articles written on possibly more widespread Chinese credit
defaults. Processors are losing the equivalent of $100/ton on product
handled.
- Trade will
watch for overbought Chinese cancellations and more defaulted purchases
from processors.
- The SK/SN
is steady, trading at a 12 cent inverse.
Wheat
- Violence
was limited yesterday in eastern Ukraine as Vice President Biden visited
in attempt to develop a peaceful reconciliation.
- Iraq
passed up on a chance to buy 50,000+ MT of wheat.
- Japan is
in the market for 108,789 MT of wheat in its weekly purchase.
- Yesterday’s
reversal is speculated to have been a result of freeze damage being less
apparent than first thought. The CCI ratings were mixed
yesterday. HRW dropped 3 points to 290/500 and SRW improved 2 points
to 354/500.
Grain
Merchandiser
Midwest
Cooperatives
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800-658-3670
605-295-3100
(cell)
605-258-2166
(fax)
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